DUBAI (Reuters) – State-run Abu Dhabi National Oil Company (ADNOC) said on Monday it had completed a placement to institutional investors of 10% in its subsidiary ADNOC Distribution’s ADNOCDIST.AD total share capital, or 1.25 billion shares, valued at $1 billion.
The placement will increase ADNOC Distribution’s free float to 20%, and contribute to improved liquidity of the company, ADNOC said in a statement. ADNOC will retain an 80% strategic stake in ADNOC Distribution and continues to see strong growth potential in the company, it added.
The transaction represents “the largest block placement of a publicly listed” company in the Gulf region and “leverages significant investor demand for ADNOC Distribution shares”, ADNOC said.
In 2017, ADNOC listed 10% of ADNOC Distribution, the largest operator of petrol stations and convenience stores in the United Arab Emirates, on the Abu Dhabi Securities Exchange.
ADNOC had been considering selling a bigger stake in its fuel distribution business, including a secondary listing overseas, after the initial public offering (IPO) in 2017, Reuters had reported.
On Monday, ADNOC said the placement was priced at 2.95 dirham per share, which is 18% above the IPO price of 2.50 dirham and represents a 5% discount to the company’s 3-month volume weighted average price.
“This transaction highlights the attractive nature of ADNOC Distribution to investors, and … demonstrates the high quality investment opportunities offered by ADNOC,” Sultan Al-Jaber, the chief executive officer of ADNOC, said in the statement.
“For the investors, it presented a unique opportunity to access a sizeable stake in ADNOC Distribution … with an attractive and resilient dividend policy.”
Last month, ADNOC Distribution said its 2020 dividend policy would continue with an increase of 7.5% to 2.57 billion dirhams.
Four years ago, ADNOC started a transformation strategy to adapt more quickly to market changes, and the company has said it will continue to work with investors to attract foreign capital and maximise value from its resources.
Reporting by Rania El Gamal, editing by Louise Heavens and Mark Potter